Now, MFs anchor IPOs on SME platform

Suresh P Iyengar Mumbai | Updated on January 09, 2018

Till recently, fund houses bought stocks from the SME bourses

Mutual funds are not only targeting young investors but also investing in budding companies with bright future on SME exchanges.

The recent sharp run-up in valuation of small- and mid-cap companies has forced mutual funds to consider initial public offers on the SME platform.

For the first-time ever, HSBC Midcap Equity Fund and YES Bank have invested ₹12 crore as anchor investors in the IPO floated by One Point One Solution, a Thane-based business process management company. Given the marque anchor investor participation, the issue was subscribed 84 times and received over ₹2,600 crore against the offer size of ₹44 crore, according to NSE Emerge data. .

Mahavir Lunawat, Managing Director, Pantomath Capital Advisors, said it is a milestone in the history of SME exchange to attract anchor investments from a mutual fund and private sector bank which will boost investor confidence.

Avenue to deploy excess fund

It will also provide an avenue for mutual funds to deploy the increased fund flow in their small- and mid-cap schemes in SMEs, he added.

Of late, some of the mutual funds have restricted fund flow into their mid-cap schemes due to the sharp increase in valuations not supporting the business prospects in the near future.

Incorporated in 2008, One Point One Solutions’ services range from data management and business analytics, to integrated telephony management, payment gateway management and IVR solutions to offering skill development and training programmes.

Akshay Chhabra, CMD, One Point One Solutions, said the company targets to hit a topline of ₹300 crore by 2020 from the current ₹100 crore, through acquisitions and expansion of business.

“Once the company gets listed on an exchange, the stocks become a currency and can be used for acquisition and grow the business faster,” said Chhabra.

Till recently, Lunawat said mutual funds have always bought stocks from the secondary market of the SME exchanges and have gained confidence over time. Since these IPOs are rightly priced, it leaves a lot on the table for investors who come in at an early stage, he added.

300 listings

Nikhil Khandelwal, Managing Director, Systematix Shares & Stocks, said the SME platform has seen listing of about 300 companies which works out to almost one listing a day.

Though liquidity in the secondary market was a problem, it is being eased with the issue sizes getting bigger and market makers playing a crucial role, said Khandelwal.

Published on December 15, 2017

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